In the beginning of every fiscal year, employees are asked for details like their investment in ELSS (Equity Linked Savings Schemes), insurance policies, house rent, home loan, education loan etc. by their employer to arrive at the annual tax liability of an employee. This annual exercise also helps you do tax planning for the year. Based on the declaration, your employer calculates TDS or tax deducted at source. The employer will deduct tax from salary and deposit it with the tax authorities. Starting April 1, 2017, some income tax laws have changed.Here are changes in tax laws you should be aware before submitting tax declaration:
1) The tax rate on income between ₹ 2.5 lakh and ₹ 5 lakh has been halved to 5 per cent from 10 per cent. However, rebate under Section 87A gets reduced from ₹ 5,000 to ₹ 2,500. And no rebate will be applicable for taxpayers having income above ₹ 3.5 lakh.
2) A 10 per cent surcharge will be applicable for individuals having income ranging from ₹ 50 lakh to ₹ 1 crore (existing surcharge of 15 per cent will remain the same for individuals having income above ₹ 1 crore). However, those with taxable income of above ₹ 50 lakh get the benefit of marginal relief. The concept of marginal relief is designed to provide some relief in levy of surcharge to a taxpayer where the total taxable income marginally exceeds ₹ 50 lakh or ₹ 1 crore.3) No deduction will be allowed for investment in Rajiv Gandhi Equity Saving Scheme, which has been scrapped this year. This tax-saving scheme was designed exclusively for the first-time individual investors in the securities market with gross total income below a certain limit.
4) The government has cut down tax benefits borrowers enjoyed on properties, other than self-occupied. For properties rented out, a borrower could deduct the entire interest paid on home loan after adjusting for the rental income. On the other hand, borrowers of self-occupied properties get a deduction of ₹ 2 lakh on interest repayment on home loan. But from this year, the borrower can only claim a deduction of up to ₹ 2 lakh per year after adjusting for the rental income.
[“source=ndtv”]
